Search

Editors

Harry Cassin Publisher and Editor

Andy Spalding Senior Editor

Jessica Tillipman Senior Editor

Richard L. Cassin Editor at Large

Elizabeth K. Spahn Editor Emeritus 

Cody Worthington Contributing Editor

Julie DiMauro Contributing Editor

Thomas Fox Contributing Editor

Marc Alain Bohn Contributing Editor

Bill Waite Contributing Editor

Shruti J. Shah Contributing Editor

Russell A. Stamets Contributing Editor

Richard Bistrong Contributing Editor 

Eric Carlson Contributing Editor

Bill Steinman Contributing Editor

Aarti Maharaj Contributing Editor


FCPA Blog Daily News

Thursday
Jul172008

Why We Keep Plugging

It's a familiar and unwelcome moment. Those on the other side of the table spot the FCPA compliance language for the first time:

The joint venture and all its personnel shall comply in all respects with the requirements of the United States Foreign Corrupt Practices Act.
Faces darken. The mood in the room goes sour.

"What's this?" they ask. "U.S. law doesn't have anything to do with our joint venture."

You start explaining: "The FCPA outlaws public bribery by Americans outside the United States. American companies are obligated to comply wherever they do business. Part of that is making sure their overseas partners don't pay bribes . . . "

"Excuse us," they say. "Our new joint venture isn't an American company and we're not Americans. Forget it. Anyway," they add, "our country has its own anti-corruption laws. And we always obey THEM."

It's going to be a long day. Lots of long days.

_____________

Reactions overseas to the FCPA range from mild irritation to vein-popping outrage. It's understandable. The law is sometimes seen as another example of America's arrogance and overreaching, a violation of sovereignty -- legal imperialism at its worst, and high-handed global moralizing. But that's a bum rap. Really.

The FCPA's aim isn't to change the world. It's to stop U.S. companies and their people from bribing foreign officials to obtain or retain business. That's clear from the early debates. Congress didn't want Americans bribing foreign government officials. Doing that, lawmakers and regulators said, distorts competition, ruins reputations, harms local populations and interferes with the foreign policy of the U.S. government.

But people always look for loopholes and shortcuts, so the FCPA takes that into account. It outlaws bribes to foreign officials that are paid directly or indirectly. And it's the indirectly part that causes so much upset overseas.

The FCPA says you can't hire an agent to pay bribes for you. You can't use joint venture partners for the dirty work either. You can't use a brother-in-law or charitable foundation or any other circuitous route. Bribes to foreign officials that originate from your hand are always your responsibility, no matter how indirectly you try to pass them on.

So when American companies go abroad, they have to make sure their business partners -- suppliers, subcontractors, professional advisors, agents and, of course, joint venture partners -- don't pay bribes to foreign officials to help the business. Taking steps to prevent that is required by an effective compliance program. Companies that don't try to stop intermediaries from paying bribes have no real defense under the FCPA when problems happen.

Does explaining all this (and a lot more) to overseas business partners help? Does it soothe their bruised pride and wounded nationalism? Yes, it usually helps, but the process isn't easy. Let's face it -- the FCPA makes people mad. Take due diligence: What contacts have you had for the past five years with any government or government-controlled entity? Are you now paying or have you ever paid bribes to anyone in any government? Can we ask your lawyer, banker, accountant and business associates if you're trustworthy? Those sorts of questions never sound friendly.

To get deals done overseas, though, it's necessary to explain what the FCPA is, what it's meant to accomplish, and how it works. That's good compliance and good business -- and worth fighting for.

So what's better? Spending a few extra hours or days at the negotiating table to do the right thing at the start, or spending years or even a lifetime trying to repair the terrible damage that an FCPA offense can cause?

.

Monday
Jul142008

Unpeeling Opinion Procedure Releases

Our post about DOJ Release 08-03 -- which deals with the payment of promotional expenses to journalists who work for state-owned media in China -- drew this comment from Frequent Reader . . .

Interesting, but the value of the release is uncertain to commercial companies that cannot meet the stipulation that they "have no business pending with any PRC government agency." Unlike TRACE, many US companies are in China to conduct commercial business which inevitably means business will likely be pending with a PRC agency or state-owned entity.
We responded this way . . .
Careful. TRACE's "representations" are not necessarily "conditions" applicable to all companies in a similar situation. For example, in at least one other recent Release related to the PRC involving promotional expenses, Release 07-02 (September 11, 2007), the Requestor represented that it had no non-routine business pending before the agency that employed the specific "foreign officials" receiving payments. That's a much narrower representation and could apply to many or even most companies.
Since we're the blogger here, we're going to say a bit more . . .

When it comes to DOJ Opinion Procedure Releases, user beware. A too-literal reading can distort the analysis. Before we get into that, though, let's say a few words in praise of Releases.

FCPA practitioners don't have a body of appellate opinions to help unlock the law's mysteries. Instead we have Releases. Although not binding on anyone except the requesting parties, and creating no legal precedent in the strict sense for anyone else, Releases still carry weight in the compliance community. With so little FCPA litigation, Releases become a de facto substitute for judicial interpretation. They don't have the force of law behind them (except as to requestors), but they're cited by practitioners and compliance professionals as "official" guidance from the government. We're no exception; we rely on Releases all the time.

So what's the problem? It's this: Releases often contain too much information. Why? Because the Opinion Procedure Regulations in 28 CFR Part 80 say, among other things, that a request to the DOJ must contain all details of the transaction. So requestors throw in the kitchen sink.

And what happens? The kitchen sink that's in the request frequently shows up in the final Release, too, where "facts" are often called "representations." But representations (aka facts) aren't equivalent to "conditions," and not all representations are equal. The facts of one case may never be duplicated in another case, and facts that are important here may not even be relevant there. Again, however, because requestors are required by law to disclose all of their relevant facts, and because those facts are likely to be repeated in the final Release, the so-called representations simply accrete. They grow like barnacles from one Release to the next. That's happened most obviously with Releases dealing with promotional expenses, a phenomenon we've commented on before.

This accretion doesn't mean the DOJ is requiring each and every representation (aka fact) in the Release. All it means is that the latest requestor had his or her own specific facts that had to be included in the request. That's the case with Release 08-03. TRACE, a non-profit organization, happens to have no pending business with the PRC government. That's a fact, not a requirement, and it could have been different. And then there are other requestors -- driven by caution or advocacy or both -- who load up their requests with lots of representations (aka facts) they've seen in earlier Releases. And so the barnacles grow.

Wherever they come from, the so-called representations in Releases shouldn't be mistaken for requirements. There are some of those, of course, but they're less common. But does all this matter? Yes it does, because viewing every representation in a Release as a requirement can only produce a view of the FCPA's affirmative defenses and exception that are too narrow to be of much use.


Sunday
Jul132008

A Gold Medal For Opinion Procedure Release 08-03

Foreign organizations in China have been vexed for years by the need to pay or reimburse Chinese journalists who attend local press events. The journalists can't afford to travel on their own and their employers don't reimburse them. But because most media outlets in the PRC are state-owned, the journalists are "foreign officials" under the Foreign Corrupt Practices Act. That means paying their expenses might violate the FCPA.

Facing this dilemma, foreign companies either don't pay the journalists anything and pass up domestic press coverage for their events in China, or they pay the local journalists (sometimes on the advice of counsel) and risk violating the FCPA.

Now, thanks to the efforts of Trace International, there's help. The DOJ has said the payments may fall within the FCPA's affirmative defense for so-called promotional expenses. That defense allows the payment or reimbursement of expenses of foreign officials that are directly related to “the promotion, demonstration, or explanation of products or services." 15 U.S.C. §§ 78dd-1(c)(2)(A) and 78dd-2(c)(2)(A).

In its opinion request, TRACE told the DOJ that for a press conference in Shanghai next week to announce the BRIBEline results for China, it will provide local and out-of-town journalists with the following benefits:

Local Journalists -- A cash stipend of RMB 200 (approximately $28) for each journalist based in Shanghai. The stipend is intended to cover lunch, local transportation costs, and incidental expenses. The cash stipends will be handed openly to each journalist upon signing in for the press conference.

Out-of-town Journalists -- A cash stipend of RMB 425 (approximately $62) for each journalist based somewhere other than Shanghai. The stipend is intended to cover lunch, local transportation costs, incidental expenses, and two additional meals. The cash stipends will be handed openly to each journalist upon signing in for the press conference. Reimbursement for economy-class inter-city domestic air, train, bus, and taxi travel upon submission of a receipt. One night's lodging for out-of-town journalists will be provided at the hotel where the press conference is being held. The lodging costs, not to exceed $229 per journalist, will be paid directly to the hotel by TRACE.

TRACE represented that:

  • Members of the state-owned PRC media are not typically reimbursed by their employers for work-related travel expenses or meals when covering an event such as the TRACE press conference.
  • TRACE will make the stipends and expense reimbursements equally available to all journalists who attend the press conference regardless of whether or not the journalists subsequently provide coverage of the press conference and regardless of the nature of such coverage.
  • The 200 RMB and 425 RMB stipends TRACE intends to pay to local and out-of-town journalists, respectively, are reasonable approximations of the costs likely to be incurred by such journalists in attending a press conference in Shanghai.
  • TRACE will send letters to the invited journalists' employers in advance of the press conference, advising that the stipend will be paid, its purpose, and TRACE's understanding that the payments are permitted under PRC laws and regulations. The letter will invite anyone with a different understanding of the applicable rules to so inform TRACE.
  • TRACE has no business pending with any PRC government agency.
  • TRACE has obtained written assurance from an established international law firm that TRACE's payment of the stipends is not contrary to PRC law.
  • TRACE will accurately record the payments in its own books and records.

The DOJ said it won't take enforcement action. "Based on TRACE's representations, the stipend and expenses TRACE intends to pay on behalf of foreign officials fall within the FCPA's promotional expenses affirmative defense in that the expenses are reasonable under the circumstances and directly relate to 'the promotion, demonstration, or explanation of [TRACE's] products or services.' 15 U.S.C. § 78dd-2(c)(2)(A)."

In an unusual reminder to other companies, the DOJ said that it "places no weight on the fact that it may be a common practice for companies in the PRC to provide such benefits to journalists attending a press conference."

Great work by TRACE -- and just in time to help the many sponsors and other foreign organizations coming to Beijing for the August 8th start of the 2008 Summer Olympics.

And kudos to the Justice Department for responding to TRACE's request in just four days.

View DOJ Opinion Procedure Release 08-03 (July 11, 2008) here.

Thursday
Jul102008

Heading For The Hammock

It's the weekend again. Good thing. We need (and deserve) some rest. What serious mind, after all, wouldn't be exhausted pondering how Tampa Bay can be one and a half games clear of the Red Sox? Strangely, our spouse seems to hold no opinion on the subject. So in our household the burden of the American League East falls entirely on our shoulders.

Still, we managed to cover some new ground this week. Iraq's civil suit against those implicated in the oil-for-food scandal caught our eye. And we noted the appeal to the House of Lords by Britain's Serious Fraud Office. We're not sure if the bigger scandal there involves BAE and Prince Bandar or the SFO itself.

What else? Oh yes -- we were wowed by the D&O Diary's trend-spotting. Looks like FCPA-inspired civil litigation is the next big hazard in the lives of our already-pummeled corporate leaders.

Meanwhile, we're waiting for the DOJ to deal with Panalpina. The global logistics firm may have stretched "facilitating payments" well beyond the current legal definition -- and in the process caused compliance headaches for practically everyone in the oil-and-gas services sector.

Siemens' hopes for a quick resolution in the U.S. of its massive corruption problems have now evaporated. Our first post about that company was back in September 2007, an eon ago in the life of a blog.

Speaking of eons . . .

Aon Corporation -- the giant insurance broker -- disclosed back in November 2007 an internal investigation into possible violations of the FCPA. When it self-reported to the DOJ it also agreed to toll the statute of limitations. So we guess no one's in a big hurry to wrap up that one.

The orthopedic device makers are waiting to learn their fate with the FCPA. We first wrote about the investigation by the DOJ and SEC into the group's overseas sales practices in October 2007. That post was also our first mention of John Ashcroft's appointment as a compliance monitor in a domestic bribery case for Zimmer Holdings.

The revelation that Mr. Ashcroft might take home $52 million from the appointment prompted our favorite blog editor emeritus, Prof Peter Henning, to note in his '07 Thanksgiving Day message: That's not a bad payday, and Zimmer -- like every other company that enters into a deferred or non-prosecution agreement -- can hardly object to the fees lest it look uncooperative and bring down the wrath of the U.S. Attorney's Office. So much to give thanks for this Thanksgiving.

Well, with the FCPA backlog still growing, we could keep at this for a long time. But our thoughts must now return to more weighty matters. That's right -- the mystery of the American League East.

Enjoy the weekend.

.

Wednesday
Jul092008

Heads I'm Corrupt, Tails You're Poor

The FCPA matters because public corruption and poverty walk hand-in-hand. The point is illustrated too well by conditions in Bangladesh, a perennial basket case in the world economy. Here are some facts:

  • Bangladesh ranked 162nd on Transparency International's 2007 Corruption Perception Index. It was tied with Cambodia, the Central African Republic, Papua New Guinea, Turkmenistan and Venezuela.
  • This week the country's Anti-Corruption Commission said several of its own members have been taking bribes. "We have decided to take action against 28 of our officials after an internal monitoring and surveillance has found them seeking or taking bribes and breaking service rules such as secretly buying properties," a spokesman said.
  • With more than 150,000,000 people, Bangladesh is the world's seventh most populous country. Yet its per capita GDP of just $1,374 ranks 148th, with about half the population living below the poverty line.
  • A World Bank Country Director in Bangladesh, Frederick T. Temple, described the impact of public corruption this way: The poor suffer from corruption in many ways. Their access to services, such as public health and education, is reduced when drugs and textbooks are stolen from public facilities and sold privately and when doctors and teachers have high rates of absenteeism from their public jobs and sell their services privately. Corruption invariably channels public resources to the rich – the poor lack the funds to bribe or pay for the private provision of services that are supposed to be provided for free as public services. Almost everybody suffers from corruption, but the poor suffer more.
  • Transparency International's 2005 household survey found that in public hospitals, 26.4% of patients had to pay bribes to doctors for receiving medical treatment; 37.5% who had surgery and 57% who had an X-ray had to pay bribes.
  • Dealing with the police was worse. More than 90% of households who lodged police reports had to pay bribes and 80% who needed any type of clearance certificate had to pay bribes. Things weren't much better in court, where 71% of the accused and 66% of plaintiffs had to pay bribes.
  • Of the households who took a loan from a public bank, the average waiting time was 108 days. For their loans, 61% had to pay bribes.
  • A report from Bangladesh cited by the U.N. found that a cattle trader had to pay extortion money at eight different places along the way to the market, both to the police and organized criminals - which added as much as 20% to the selling price.
  • Red tape -- public corruption's awful twin -- is legendary. The Bangladesh News recently reported that despite enormous demand, there's gridlock in the development of compressed natural gas delivery. "It often takes several years to launch a CNG refueling station as the government offices concerned miserably lack coordination," the report said. Over 100 applications are tied up. Approval is needed from at least nine departments and agencies, and aggrieved entrepreneurs said within one agency alone a file has "to pass through 64 tables," providing lots of opportunities for bureaucrats to extract bribes.

Tuesday
Jul082008

FCPA-Inspired Civil Suits Take Center Stage

The always-helpful D & O Diary has a great post about FCPA-related civil litigation here. The topic is big news these days, with interest spurred by front-page suits brought by alleged victims of overseas public corruption -- most lately the government of Iraq, Bahrain's Alba and Denver oilman Jack Grynberg.

In the post and in a memo linked to it here, the D&O Diary moves the discussion further downstream -- to shareholder derivative suits based on FCPA-related conduct or allegations. And the subject isn't merely academic.

There's Willbros' $10.5 million settlement of a class action suit after the company restated results and upped its reserve to cover potential FCPA-related penalties; Immuncor's $2.5 million settlement of a suit claiming the company and some of its leaders misled investors about business practices and internal controls; and an ongoing securities lawsuit in which the plaintiffs claim that Nature's Sunshine Products, Inc. lacked internal controls and didn't properly account for foreign transactions.

Shareholder derivative suits based on allegations of overseas public bribery have also been filed against BAE Systems and Alcoa (see Alba above). Those cases, the memo says, illustrate how leading plaintiffs' securities lawyers are leaping in, signaling that more such suits are on the way.

For directors and officers, the potential coverage gaps in liability insurance are eye-opening. For example, D&O policies sometimes contain a so-called "commissions exclusion." It precludes coverage for losses from claims related to payments to or for an agent or employee of any foreign government. If that sounds like a prohibited payment under the FCPA, it's because the exclusion, as the memo notes, was created right after the FCPA's enactment. Then there's excluded coverage for FCPA-related fines and penalties, defense expenses for enforcement actions and . . . . well, lots more.

A special thanks to Kevin LaCroix and his D&O Diary for the reliable and otherwise hard-to-find information

View our prior posts on the private right of action for FCPA-related conduct here.
.

Monday
Jul072008

The Lords Hear From The SFO

Yesterday the Serious Fraud Office asked the House of Lords to overturn April's High Court ruling that the SFO broke the law when it dropped its corruption investigation of BAE Systems.

The case involves BAE's alleged secret payments of £1 billion to the former Saudi ambassador to the United States, Prince Bandar bin-Sultan. The payments were allegedly made when BAE was trying to sell jet fighters to the Saudi government.

In late 2006, the SFO was about to gain access to Swiss bank accounts that may have shown where BAE's payments went. The Saudis threatened to end anti-terrorism cooperation with the U.K unless the SFO stopped its investigation. The High Court in April criticized the government's capitulation as illegal and blasted the Saudi threats. "No one within this country or outside," the court said, "is entitled to interfere with the course of our justice."

Yesterday the SFO's lawyer told the Lords that Robert Wardle, who was then the SFO's director, was "convinced that Saudi Arabia was not bluffing." By December 2006, the lawyer said, Wardle believed the "danger was now both very grave and imminent." Because Wardle's decision was based on national security and not on commercial considerations, the lawyer said, the SFO was justified in stopping its investigation.

Public interest groups are arguing that the SFO's action contravened its charter and Britain's commitments under the OECD's anti-corruption convention.

The hearing before the Lords is continuing.

Whatever happens in London, the U.S. Justice Department is conducting its own investigation. The DOJ wants to know whether BAE and Prince Bandar violated the Foreign Corrupt Practices Act and anti-money laundering laws.

In May this year, the DOJ turned up the heat. BAE's chief executive Mike Turner and director Nigel Rudd were detained at U.S. airports. Authorities apparently copied information from their laptop computers, cell phones, and papers before letting them leave. The DOJ has also reportedly served subpoenas on other BAE employees in the U.S.

In November 2007, according to the U.K.'s Guardian, the DOJ obtained Swiss banking records and evidence from a U.K. businessman who was part of the deal. The paper reported that Peter Gardiner had boxes of invoices allegedly detailing payments made by BAE to members of the Saudi royal family. Gardiner was flown by FBI agents to Washington in August 2007 to give testimony there. He traveled via Paris to avoid British attention, the paper said.

There's no evidence that BAE is co-operating with the DOJ's investigation. In fact, a Times Online article in May this year quoted a former DOJ official as saying that the recent heavy-handed behavior of U.S. authorities indicated "a severe lack of cooperation by BAE."

BAE and Prince Bandar have denied breaking any laws.

.

Sunday
Jul062008

Shock And Awe In U.S. Federal Court

The government of Iraq filed a civil suit in late June in federal district court in New York City against two individuals and about 50 companies and some of their related firms for bribery that allegedly occurred under the United Nations oil-for-food program. Referring to the U.N. program as "the largest financial fraud in human history," the 47-page complaint seeks more than $10 billion in damages.

Many of the defendants named in the complaint -- which relies heavily on the U.N.'s October 2005 internal report by former Federal Reserve Chairman Paul Volcker -- have already faced enforcement action for violating U.N. regulations or U.S. law, including the Foreign Corrupt Practices Act. Among those discussed in our prior posts are ABB, AB Volvo, Flowserve, Akzo Nobel, Chevron, Siemens, Ingersoll-Rand, York International, Oscar Wyatt, El Paso (successor to Coastal Corp.) and Textron. Others named in the complaint include Air Liquide, Atlas Copco, Boston Scientific, BNP Paribas, Buhler, Daewoo, Daimler-Chrysler, Dow, Eastman, Glaxo, Dresser, Kia Motors, Novo Nordisk and Vitol.

The complaint describes how kickbacks paid to representatives of Saddam Hussein were funded through illegal and undisclosed transportation and port fees, bogus after-sales service fees and overpricing of goods and services.

Although there is no private right of action under the Foreign Corrupt Practices Act, this is the third civil suit filed this year in U.S. federal court by alleged victims of overseas public corruption. In March, Bahrain-owned Alba sued Alcoa and its agent in Pittsburgh for allegedly inflating prices and using the money to bribe Bahraini officials. Then in April, Denver-based oilman Jack Grynberg and his company brought a suit in the District Of Columbia against their former consortium partners BP and Statoil, and their top executives, for allegedly using some of Grynberg's money to bribe government officials in Kazakhstan.

Similar to the Alba and Grynberg complaints, the Iraqi government's claims are based on the Racketeer Influenced and Corrupt Organizations Act (RICO), common-law fraud and breach of fiduciary duty. Iraq also alleges illegal price discrimination under the Robinson Patman Act ("It shall be unlawful for any person engaged in commerce, in the course of such commerce, knowingly to induce or receive a discrimination in price which is prohibited by this section.").

The complaint says the federal court in New York should hear the case because the oil-for-food program was administered at the United Nations' headquarters there, all funds related to the program "were supposed to pass through an escrow account in New York," and all oil-for-food contracts were "approved in New York."

View Iraq's complaint here (courtesy of The AmLaw Daily).

.

Wednesday
Jul022008

Good News For Mr. Pinkerton

A report yesterday from Dow Jones said the United States has dropped its sputtering prosecution of David B. Pinkerton on charges of conspiring to violate the Foreign Corrupt Practices Act.

The government had alleged that in June 1998, as the head of AIG Global Investment Corp., Pinkerton invested about $15 million of AIG's money in a consortium headed by Victor Kozeny -- with the understanding that Kozeny was bribing Azeri officials to ensure the privatization of the State Oil Company of the Republic of Azerbaijan (SOCAR).

Prosecutors last year suffered a double setback in the case. In June 2007, a federal district court in Manhattan dismissed all FCPA and related counts against Kozeny, Pinkerton and their co-defendant, Frederic Bourke, Jr. The court said the FCPA's five-year statute of limitations had already expired. The government appealed, but then in October the Bahamas Supreme Court ruled against Kozeny's extradition, refusing to order his return to the U.S. to face trial. He's from the Czech Republic and reportedly has Irish citizenship, but he's been living in the Bahamas for more than a decade.

Dow Jones said U.S. District Judge Shira A. Scheindlin's order of nolle prosequi dismissing the charges against Pinkerton was signed but hadn't yet appeared in the court's public electronic filing system. The report continued,

In the nolle prosequi request - a copy of which was reviewed by Dow Jones Newswires - Assistant U.S. Attorney Jonathan Abernethy wrote, "Based upon a review of the evidence and information pertaining to this defendant acquired since the filing of the indictment, the government concluded that further prosecution of David Pinkerton in this case would not be in the interest of justice."

No word yet on whether the government will also drop its case against Bourke.

 

Prosecutors obtained a related conviction in February 2004. Clayton Lewis, a former employee of Omega Advisors, Inc., pleaded guilty to conspiring to violate the FCPA. Then in July 2007, Omega itself settled with the government, entering into a non-prosecution agreement with the DOJ and agreeing to a civil forfeiture of $500,000. As the Justice Department noted then, Omega invested more than $100 million with Kozeny in 1998 for the Azeri privatization program. But the program fizzled and Omega lost its entire investment.

 

_________

A safe and happy Fourth of July to our American readers. It's easy to be cynical, and somehow "patriotic" has become a slur. That's too bad. Expressing gratitude for the blessings of country and countrymen is always fitting. To be sure, our Republic reflects human nature -- all of it. The flaws and pettiness and insecurities are there, but so are our finest traits. And while Americans from left, right and center are often bothered by the messiness of our great experiment with democracy, we can all be proud that ours is still a country of freedom, opportunity and hope. See you next week.

 

.

 

Monday
Jun302008

Cash In The Freezer

The strange case of the Honorable William J. Jefferson, Member of the United States House of Representatives, keeps getting stranger.

Rep. Jefferson (D-La.) -- a Congressman since 1991 from a district that includes New Orleans -- was indicted in June last year by a federal grand jury for violating the anti-bribery provisions of the Foreign Corrupt Practices Act. He was also charged with soliciting and accepting bribes, wire fraud, money laundering and obstruction of justice. He faces a maximum of 235 years in prison if convicted on all 16 counts.

Now he says that in spite of the indictment, he's running for re-election. "The fact that I am the target of an overly zealous prosecution has not prevented my delivering for our district and our state," he said last month. Jefferson, 61, becomes not only the first elected federal official to be indicted under the FCPA, but also the first person to run for Congress while facing criminal FCPA charges.

Prosecutors allege that in August 2005, Jefferson hid $90,000 in the freezer at his Washington home. It was part of $100,000 provided by the government's cooperating witness and intended to be used to bribe a Nigerian official. "The cash was separated into $10,000 increments, wrapped in aluminum foil, and concealed inside various frozen food containers," according to prosecutors. The purpose of the alleged bribe was to induce the Nigerian official to steer business from Nigeria's dominant government-controlled telecommunications company to firms in which Rep. Jefferson's family members had interests.

“The schemes charged are complex," the Department of Justice said in its news release, "but the essence of this case is simple: Mr. Jefferson corruptly traded on his good office, and on the Congress where he served as a Member of the United States House of Representatives, to enrich himself and his family through a pervasive pattern of fraud, bribery and corruption that spanned many years and two continents.”

Rep. Jefferson's alleged co-conspirators were Vernon L. Jackson, a Louisville, Ky., businessman, and Brett M. Pfeffer, a former Jefferson congressional staff member. Jackson was sentenced to 87 months in prison after pleading guilty to conspiracy to commit bribery and paying bribes to a public official. Pfeffer was sentenced to 96 months in prison after pleading guilty to conspiracy to commit bribery and aiding and abetting the solicitation of bribes by a member of Congress.

As the Department of Justice says: Criminal indictments are only charges and not evidence of guilt. A defendant is presumed to be innocent until and unless proven guilty.

A conviction would bring a tragic end to Rep. Jefferson's amazing career. His official bio says he's the first African-American elected to Congress from his native Louisiana since Reconstruction. He graduated from Southern University A&M College and Harvard Law School, and in February of 1996 he received his Master of Laws in Taxation from Georgetown University, "making him only the second Member of Congress to do so while serving in the U.S. House of Representatives." As a State Senator, his bio says, he was "twice named 'Legislator of the Year' by the prestigious Alliance for Good Government."

View the DOJ's June 4, 2007 news release here.

.

Friday
Jun272008

Lights Out On Another Week

Fridays are a mellow and reflective time here at the FCPA Blog. Feet on the desk, head tilted back, wondering what we'll eat over the weekend since the spouse took eggs benedict off our menu.

So we were thinking -- were we too hard on the Justice Department this week? The DOJ appeared in a couple of posts that were a bit off topic, prompting a friend to ask, "Does the FCPA Blog have an opinion about everything or is it just a busy body?" For the record, we admire and respect most of what happens at the DOJ. We appreciate the public service its people perform and our hats are off to them. But they're at the center of all FCPA criminal enforcement and, don't forget, we're all lawyers around here. So we're bound to shower them with attention -- if not always affection.

* * *

A few days ago the folks at the Economist Intelligence Unit, whose logo we're exploiting today, asked us to speak at their September '08 FCPA Conference in New York City. The St. Regis Hotel is a great venue and two of the speakers among many are Mark Mershon, the assistant DIC of the FBI's New York regional office, and Katheryn Nickerson, a senior lawyer at the Commerce Department, whom we've quoted here. They'll have perspectives on the FCPA that'll be different and worth hearing. Our other job, though, means we don't always have tight control over our schedule -- meaning we don't really know where we'll be tomorrow -- so we haven't committed yet to being in New York in September (our favorite month in the city). But we're working on it.

* * *

On Wednesday this week we talked about Halliburton, Expro and Umbrellastream (makes you think of Mary Poppins, doesn't it?). If you haven't read about the DOJ's FCPA Opinion Procedure Release 08-02, try to make some time for it. It's a genuine piece of FCPA history -- the first time on record that an attempted hostile takeover has intersected with the FCPA's compliance requirements. The Release shows some of the enormous influence the FCPA is having on American business, and on companies abroad. It also shows how much involvement our friends at the DOJ can have in an organization's life on questions of compliance. Lawyers, investment bankers, pundits, professors and various experts are going to be talking about this Release (and trying to live with it) for decades.

Well, it'll soon be time to turn the lights off around here. Another week gone by. We don't suppose there's a low-fat, cholesterol-free, no-sodium, high-fiber, nutrient-dense version of eggs benedict on the market yet? Probably not.

.

Thursday
Jun262008

The DOJ's Slaughter Of Hope

The Justice Department broke civil service laws and the country's heart by "deselecting" qualified young applicants linked to Democrats and liberal groups ("weed out the wackos and wack jobs"). It's the saddest news we've heard from the District in a long time -- maybe since the plumbers taped the door locks at the Watergate Complex.

No civic betrayals cut deeper than those by men and women sworn to protect us, but who instead abuse their power in order to mow down political opponents. Our real enemies, they forget, are those who confuse the loyal opposition with enemies of the State.

The temptations of power should never be underestimated. We can all fall from grace at any time -- but for grace itself. Still, some news weighs on the spirit. As Ellen Podgor wrote in her blog, "It is pretty frightening to think that the department that will monitor elections has been compromised and continues to be compromised by political hiring practices."

She's right. Who's guarding our liberties?

_______

Fortunately the news from Washington can't keep the sun from rising. This morning the sky was beautiful and our breakfast fruit hit the spot. Then it was time for some chores so we turned to the screen. First stop -- the latest FCPA enforcement news from the DOJ's criminal division.

But the usual businesslike homepage was missing --replaced by a cheerful greeting and more:

Thank you for visiting the U.S. Department of Justice!

You have been randomly selected to take part in a survey, presented by Foresee Results, to let us know what we are doing well and where we need to do better.

The coincidence was jolting. The DOJ wanted our opinion about its performance. We couldn't wait.
Once you leave this site, the survey will appear in this window. In the meantime, please ignore this window and continue browsing our site in the other window.
Maybe there were too many windows. Maybe we closed something we shouldn't have. Anyway, the survey never appeared and we lost our chance.

There was, however, one small dialogue box still open:

ForeSee may disclose personal information in response to a judicial or other government subpoena, warrant or order.
Which reminded us again: Who is guarding our liberties?

.